The civil servant at the centre of the Post Office row has hit back against claims that she asked for compensation payments to post office operators to be delayed. Henry Staunton, the former Post Office chair, claimed that Sarah Munby, the former top civil servant at the business department, suggested they should slow compensation payments and “hobble” to the election. Staunton’s allegations led to an extraordinary row over how ministers are handling redress for hundreds of post office operators who were wrongfully convicted in what has been called the greatest miscarriage of justice in British history. In parliament, Kemi Badenoch, the business secretary, accused Staunton of lying and seeking revenge for being sacked last month. Rishi Sunak refused to repeat her language at prime minister’s questions on Wednesday. To support his claims, Staunton produced a contemporaneous note of his conversation with Munby, which took place in January 2023. In his note, Staunton had written that Munby told him there was no appetite to “rip off the Band-Aid” in terms of government finances and that “we needed a plan to ‘hobble’ up to the election”. In response, Munby has produced her own recollection of the conversation and insisted she never “explicitly or implicitly” suggested to Staunton that he delay the payments. Munby said in a letter to Badenoch published by the government on Wednesday: “I am able to give you the very strongest reassurance … that I did not at any point suggest to Mr Staunton, or imply to him in any way whatsoever, that there should be delay to compensation payments.” Separately, the Guardian has been leaked a recording of remarks made by the Post Office deputy CEO, Owen Woodley, at a monthly town hall meeting for staff on Wednesday. In the recording, Woodley referred to Staunton’s claims in his interview with the Sunday Times as “just wrong” and said that “he should have resigned” if he was told to delay compensation payments, “because that would have been outrageous”. Woodley told Post Office staff: “Many of the things that he was talking about in that interview and the way he was putting things across was wrong. It’s just wrong. I don’t know why he chose to do that but that’s what he did and he will account for why he chose to do that.” He added: “None of us are aware of a single moment when we were asked to slow down compensation to post office operators. Not once. There is no evidence of that at all. “And frankly, if that’s what Henry Staunton was told, then I would have thought he should have resigned at the time because that would have been outrageous.” The leaked remarks are helpful to the Post Office as they suggest no other executives were made aware of an alleged instruction to delay compensation payments. Staunton’s spokesperson said he stood by his account and that his “recollection of the conversation was very clear. It was precisely because he felt what he was being told about the government’s view of the issues was so surprising, that he needed to take a note of the conversation immediately afterwards and share it with his chief executive.” Labour has called for a full Cabinet Office investigation into Staunton’s allegations. On Wednesday Keir Starmer used prime minister’s questions to pile pressure on Sunak over the row. Starmer urged Sunak to “draw a line” under the matter by releasing correspondence between the Post Office, the business department and UK Government Investments, which oversees the government’s ownership of the Post Office. Starmer said: “One of the features of this miscarriage is that where concerns have been raised they have been pushed to one side.” In response Sunak told MPs: “As the business secretary said on Monday, she asked Henry Staunton to step down after serious concerns were raised. She set out the reasons for this and the full background in the house earlier this week.” The prime minister added: “We have also taken unprecedented steps to ensure that victims of the Horizon scandal do receive compensation as swiftly as possible and in full.” There have been calls for an investigation into whether Badenoch broke the ministerial code by accusing Staunton in parliament of lying. The Liberal Democrats have asked the government’s independent adviser on ministerial ethics, Laurie Magnus, to examine whether Badenoch had misled MPs. Starmer’s spokesperson suggested on Wednesday that Badenoch may have been “using parliamentary privilege to make points that she wouldn’t be otherwise able to do so”. The government insists that compensation for post office operators is paid out of a ringfenced budget that is kept separate from the Post Office’s operational budget. In her letter, Munby claimed that there was a “complete firewall” between the two budgets and that Staunton’s account did not make sense because cutting compensation would not have affected Post Office operations. Staunton said in response that money from both budgets “remains with the Treasury until required to fund specific payouts, and the fact remains that insofar as they are unspent, the money would still be available to the Treasury”. Between 1999 and 2015, the Post Office prosecuted hundreds of post office operators after a faulty computer system, Horizon, made it look as if money was missing. The government has promised to publish legislation soon that would automatically overturn all convictions linked to the scandal.